PM intervention sought in tube well subsidy case

Finance minister says provinces should share financial burden

Zafar Bhutta September 05, 2021


Amid provinces’ refusal to pay bills, Finance Minister Shaukat Tarin has alleged misuse of subsidy in agriculture tube wells and failure of provinces to bear financial impact.

In this regard he has sought intervention of Prime Minister Imran Khan as the subject has political implications.

The Power Division had tabled a summary before the Economic Coordination Committee (ECC) to approve supplementary grant of over Rs25 billion on account of fixed charges during the current financial year 2021-22.

The other option was to pass this burden on the consumers.

However, the economic decision making body had deferred a decision as Tarin questioned that agriculture was a provincial subject and therefore, they should bear this burden.

The issue was taken up again in a meeting of the cabinet regarding payment of fixed charges on bills of agriculture tube wells.

During the discussion, Tarin informed that the ECC had deferred the case titled ‘Non-payment of GST and fixed charges by agriculture tube well consumers in Punjab, Sindh and K-P’. He wanted to seek guidance from the cabinet as the issue had political overtones.

He explained that although the subsidy on tube wells was desirable to maintain the momentum in the agriculture sector, its misuse and failure by the provinces to share the burden had made it unsustainable for the federal government.

Since agriculture is a devolved subject, it was for the provinces to take the financial impact of the subsidy, especially when they were being provided substantial resources under the National Finance Commission (NFC) Award.

It was suggested that the way forward rested in solarisation of tube wells, which could be incentivised through funding support. The prime minister agreed to hold a meeting of on the issue to discuss policy options in details.

Earlier, the economic decision making body had taken up the matter regarding non-payment of dues by agriculture tubewells consumers in Punjab, Sindh and Khyber-Pakhtunkhwa.

The Power Division had briefed the case in details and approval of the ECC was solicited to the proposals that since the provincial governments do not agree to pay the GST, the full amount would be passed to the consumers in the respective distribution companies from the August billing cycle.

Another proposal was that fixed charges will be part of the subsidy and would be paid by the federal government.

An amount of Rs9.248 billion may be provided as supplementary grant during CFY2021-22. In case this is not possible, the amount of fixed charges may be passed on to the consumers in the August billing cycle.

Arrears of Rs16.658 billion in terms of fixed charges may be released as supplementary grant in 2021-22.

It further said that the past arrears of GST may be recovered from the consumers since the provincial governments have declined to make the payment.

During the ensuing discussion, Tarin, who is also ECC chairman, had observed that agriculture is a provincial subject.

Published in The Express Tribune, September 5th, 2021.

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